SBI, ICICI, RBI - Current Affairs Questions and Answers

ANSWER: Sanchet.rbi.org.in

Explanation:
To prevent illegal and unauthorised pooling of funds by firms, RBI launched a website called sachet.rbi.org.in which alerts people regarding entities allowed to collect deposits.

• Portal will facilitate filing, tracking of complaints besides providing information about whether any particular entity is permitted to accept deposits and registered with the regulatory authority for the same.
• Sachet means the Hindi word for later and will help regulators to assist members of the public.

ANSWER: 25%

Explanation:
Last year, the apex bank had transferred 52,679 crore rupees of its surplus profit to the Government.

ANSWER: BHARAT-22

Explanation:
The Government of India launched the BHARAT-22 Exchange Traded Fund (ETF) managed by ICICI Prudential Mutual Fund targeting an initial amount of about INR 8,000 crore on 14^th Nov, 2017.

This New Fund Offer is open till November 17, 2017.

The Units of the Scheme will be allotted 25% to each category of investors. In this ETF, the Retirement Fund has been made separate category of Investors.
In case of spill-over, additional portion will be allocated giving preference to retail and retirement funds. There is a 3% discount across the board.

The strength of this ETF lies in the specially created Index S&P BSE BHARAT-22 INDEX.

This Index is a unique blend of shares of key CPSEs, Public Sector Banks (PSBs) and also the Government owned shares in blue chip private companies like Larsen & Tubro (L&T), Axis Bank and ITC.

The shares of the Government companies represent 6 core sectors of the economy-Finance, Industry, Energy, Utilities, Fast Moving Consumer Goods (FMCG) and Basic Materials.

The index has previously out-performed the NIFTY-50 and Sensex.

The Index constituents include leading Maharatanas and Navratanas such as Coal India, GAIL, Power Grid Corporation of India Ltd. (PGCIL), National Thermal Power Corporation (NTPC), Indian Oil Corporation Ltd., Oil & Natural Gas Corporation (ONGC), Bharat Petroleum, and National Aluminium Company (NALCO), three Public Sector Banks such as SBI, Bank of Baroda apart from the 3 private sector companies mentioned earlier.

Reforms and ETF

• The Government of India is undertaking a number of Key Economic Reforms which is driving growth in these sectors of economy. The major reforms such as mentioned below for which market expert believe will fuel the growth in the economy and may benefit the underlying stocks in ETF.
• Finance: Insolvency and Bankruptcy Code 2016, Digital and Cashless Economy, Listing of Insurance companies, Bank recapitalization and Goods and Services Tax (GST).
• Commerce: Liberalization of Foreign Director Investment (FDI) in India
• Oil: Direct Benefit Transfer of LPG subsidies, Introduction of Daily Fuel pricing, Consolidation of Govt. run oil companies.
• Energy: Revival package for electricity distribution companies of India (DISCOMs).

ANSWER: Both a and b

Explanation:
The Reserve Bank today relaxed norms for issuance of rupee-denominated overseas bonds, popularly known as masala bonds.

They will be treated as external commercial borrowings from October 3, thereby freeing up more investments by FPIs.

Currently, the limit for investment by foreign portfolio investors (FPIs) in corporate bonds is INR 2,44,323 crore.

This covers issuance of masala bonds by resident entities of INR 44,001 crore, including the ones in pipeline.

After a review, the RBI said that from October 3, masala bonds will no longer form part of the limit for FPI investments in corporate bonds.

They will form part of the ECBs and will be monitored accordingly.

As a result, INR 44,001 crore arising out of shifting of masala bonds will be released for foreign portfolio investor (FPI) investment in corporate bonds over the next two quarters.

Now, FPI investment limit for corporate bonds will increase to INR 2,44,323 crore from January 1.

Further, an amount of INR 9,500 crore in each quarter will be available only for investment in the infrastructure sector by long-term FPIs - sovereign wealth funds, multilateral agencies, endowment, insurance and pension funds and foreign central banks.

With surge in inflows in Indian debt markets, the cumulative utilisation of FPI limit in corporate bonds stood at 99.07 per cent as on September 21, 2017, reflecting limited scope of further FPI investments.

The Reserve Bank of India (RBI) changed the rules pertaining to the calculation of the foreign investment limit in so-called masala bonds, potentially opening up space for Indian companies to sell more such securities.

“Such a shift will allow companies to issue masala bonds as they are currently barred by Sebi (Securities and Exchange Board of India).

This will also lead to better monitoring of issuances by RBI as the external commercial borrowings framework is restrictive in terms of end-use of funds.

In a 20 July circular, market regulator Sebi had said that issuance of masala bonds would be temporarily stopped until the total foreign holding of corporate bonds falls below 92% of the limit.

As of 21st Sept 2017, foreign investors had exhausted over 99% of the available cap.

In June, the Reserve Bank of India had tightened the rules on the issuance of masala bonds.

The central bank mandated a minimum maturity of three years for sales of up to $50 million. Issuances above $50 million must be of five years or above maturity.

ANSWER: 5

Explanation:
The merger of the five associate banks with the SBI will lead to increased capital base and availability of loan, as the Lok Sabha passed the bill approving the amalgamation.

The Lok Sabha passed the bill to repeal the SBI (Subsidiary Banks) Act 1959, State Bank of Hyderabad Act 1956 and to further amend the State Bank of India Act, 1955, following the merger of five associates with the parent SBI.

With this merger, the SBI has come in the list of top 50 banks globally and is ranked at the 45th position.

The merger will bring about increased capital base and increased ability to give loans. Also, small banks will get access to products like mutual funds.

During the last two years, 29 crore bank accounts were opened, of which 25 per cent were zero balance accounts and farm loans increased from INR 3.5 lakh crore in 2009-10 to INR 10.65 lakh crore in 2016-17.

The merger will help increase SBI’s scope of operation and will pose a challenge to private banks as it will work as per the requirements of the people.

The merger has been planned keeping in mind the benefit of people and going forward its benefits will be seen.

According to the statement of object and reasons of the State Banks (Repeal and Amendment) Bill 2017, after the acquisition of the subsidiary banks by SBI, the subsidiary banks have ceased to exist and, therefore, it is necessary to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956.

Five associates and the Bharatiya Mahila Bank became part of State Bank of India (SBI) beginning April 1, catapulting the country's largest lender to among the top 50 banks in the world.

The five associates that were merged are State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT).

Following the merger, the total customer base of SBI increased to 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country.

The merged entity began operation with a deposit base of more than INR 26 lakh crore and advances level of INR 18.50 lakh crore.

As per the bill, after the acquisition of all the subsidiary banks by the SBI, it is not necessary to retain such provisions in the State Bank of India Act, 1955. .

Therefore, certain amendments are necessary in the said Act in so far as they relate to the subsidiary banks. The amendments are consequential in nature.

SBI had 90 per cent shareholding in the State Bank of Mysore, 75.07 per cent shareholding in the State Bank of Bikaner and Jaipur and 79.09 per cent shareholding in the State Bank of Travancore.

SBI: Know More

• State Bank of India is an Indian multinational, public sector banking and financial services company.
• It is a government-owned corporation with its headquarters in Mumbai, Maharashtra.
• Customer service: 1800 425 3800
• Chairperson: Arundhati Bhattacharya
• Headquarters: Mumbai
• Founded: 1 July 1955
• Major Subsidiaries: SBI Cards, State Bank of Hyderabad

ANSWER: 6 percent

Explanation:
The RBI has cut the repo rate by 25 bps to 6%. This was on expected lines as market consensus predicted a 25 bps cut.

Reverse repo rate has also been cut by 0.25 per cent to 5.75 per cent.

The six member monetary policy committee voted on the basis of a majority for a cut. Dr. Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and Dr. Urjit R. Patel were in favour of the monetary policy decision.

Dr. Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and Dr. Michael Debabrata Patra voted for status quo.

The cut in rates comes against the backdrop of slowing credit growth, very low inflation and low economic growth.

Retail inflation has fallen to a five year low of 1.5 per cent in June and expected to remain soft for a while longer. Bank credit is growing at just a little over 6 per cent year on year.

The economy has slowed down through the past five quarters from a high of 9.1% registered in the fourth quarter of fiscal 2016 to a level of 6.1% in the fourth quarter of fiscal 2017.

Factory activity contracted to an 8-year low with the purchasing managers’ index at just 47.9 points in July.

The RBI noted in its statement that actual headline inflation for Q1 has tracked projections of being in the range of 2 to3.5 per cent in the first half of the year.

Looking ahead, as base effects fade, the evolving momentum of inflation would be determined by

(a) the impact on the CPI of the implementation of house rent allowances (HRA) under the 7th central pay commission (CPC);

(b) the impact of the price revisions withheld ahead of the GST; and

(c) the disentangling of the structural and transitory factors shaping food inflation.

It noted that there are several factors contributing to uncertainty around this baseline inflation trajectory.

It flagged its concern that implementation of farm loan waivers by States may result in possible fiscal slippages and undermine the quality of public spending, entailing inflationary spillovers.

It said that the timing of the States’ implementation of the salary and allowances award is critical–it is not factored into the baseline projection in view of lack of information on their plans.

If States choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months, the statement noted.

Some moderating forces are also at work, the RBI indicated.

First, the second successive normal monsoon coupled with effective supply management measures may keep food inflation under check.

Second, if the general moderation of price increases in CPI excluding food and fuel continues, it will contain upside pressures on headline inflation.

Third, the international commodity price outlook is fairly stable at the current juncture.

RBI Retains GVA outlook

• The RBI noted that high levels of stress in twin balance sheets - banks and corporations - are likely to deter new investment.
• The real estate sector also may see delayed project launches as a new regulatory framework comes into play.
• The states’ finances could come under pressure with farm loan waivers and limit fresh capacity expansion.
• It said however there were upsides to the baseline projections emanating from good monsoon progress, a good kharif harvest, boost to rural demand, step up in rural allocations, and the positive impact of GST.
• The rising probability of another good kharif harvest, the boost to rural demand from the higher budgetary allocation to housing in rural areas, the significant step-up in the budgetary allocation for roads and bridges, and the growth-enhancing effects of the GST spur investment.
• External demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant.
• Keeping in view these factors, the projection of real GVA growth for 2017-18 is retained at 7.3%."

Inflation outlook

The RBI's Monetary Policy committee was cautious in expressing its view that while inflation has been soft, it still remained to be seen whether it was transient or whether the 'a more durable disinflation was underway'.

The MPC noted that some of the upside risks to inflation have either reduced or not materialised-

(i) the baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4 per cent by Q4;

(ii) inflation excluding food and fuel has fallen significantly over the past three months; and,
(iii) the roll-out of the GST has been smooth and the monsoon normal.

• It said, that consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap and accordingly decided to reduce the policy repo rate by 25 basis points.
• Noting, however, that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data.
• The MPC remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis, the statement said.

ANSWER: SBI

Explanation:
India’s largest commercial bank State Bank of India (SBI) on Tuesday said it has launched a dedicated portal ‘SBI Realty’.

This will help home buyers to choose flats from its 3,000 approved projects across the country, which are spread across 13 states and Union Territories covering 30 cities.

State Bank of India has taken another step towards customers’ convenience by launching ‘SBI Realty’ - a one stop integrated website www.sbirealty.in for home buyers.

At present, there are 9.5 lakh home units available on the website. Customers can compare current and past trends of prices for the properties in various localities in the city.

The portal will assist customers in calculating appropriate loan amount a customer should borrow based on income and credit profile.

SBI believes in innovation combined with an emphasis on market research, contemporary architecture, strong project execution and quality construction.

The SBI Realty website has been developed by SBICAP Securities in association with PropEquity in terms of data support, project information, etc.

SBI: Know More

• SBI is the largest commercial bank in India in terms of assets, deposits, profits, branches, customers and employees.
• The company has a deposit base of Rs 25.85 lakh crore.
• It has an extensive network, with over 24 thousand branches in India and 194 offices in 35 other countries.

ANSWER: Insolvency and Bankruptcy Code 2016

Explanation:
Reserve Bank of India (RBI) has constituted an Internal Advisory Committee (IAC), which arrived at an objective, non-discretionary criterion for referring accounts for resolution under Insolvency and Bankruptcy Code, 2016 (IBC).

In particular, the IAC recommended for IBC reference all accounts with fund and non-fund based outstanding amount greater than INR 5000 crore, with 60% or more classified as non-performing by banks as of March 31, 2016.

Accordingly, Reserve Bank of India has issued directions to certain banks for referring 12 accounts, qualifying under the aforesaid criteria, to initiate insolvency process under the Insolvency and Bankruptcy Code, 2016.

As regards the other non-performing accounts which do not qualify under the above criteria, the IAC recommended that banks should finalize a resolution plan within six months.

In cases where a viable resolution plan is not agreed upon within six months, banks should be required to file for insolvency proceedings under the IBC.

However, the names and details of borrowers are not disclosed as prescribed under section 45E of the Reserve Bank of India (RBI) Act, 1934 and Banking Laws.

These laws provide for the obligation of a bank or financial institution to maintain secrecy about the affairs of its constituents.

In respect of the above-mentioned 12 accounts, Reserve Bank of India has advised the banks to make provisions as under:

(a) 50 per cent for secured portion of the outstanding balance plus 100 percent for the unsecured portion.

(b) Provisions required to be maintained as per the extant Asset classification norms.

The additional provisions, as required in each case, should be proportionately spread over the remaining quarters of the current financial year, starting Q2.

This is so that the required provisions are fully in place by March, 2018.

The effect of the provisioning requirement prescribed in respect of the said 12 accounts would vary for each account and for the respective banks depending upon the current asset classification, current provisions held, security coverage etc.

ANSWER: Nepal

Explanation:
Nepal SBI Bank, a subsidiary of the State Bank of India, today launched its fully automatic digital banking services SBIInTouch in the Nepalese capital Kathmandu.

This is for the first time the State Bank of India has expanded the paperless banking system outside India.

Digital banking provides various services including cash deposit, opening of new accounts, distribution of debit card, ATM and online banking information on touch of the screen.

Customers can avail the services from SBI Intouch Bank.

The digital banking unit also has a robot, which provides important information to customers in an interactive manner.

Nepal Rastra Bank Governor Chirinjibi Nepal, SBI Bank’s chairperson Arundhati Bhattacharya and Indian Ambassador to Nepal Manjeev Singh Puri, jointly inaugurated the new service, the first of its kind in Nepal.

The paperless banking service has been launched to target potential younger customers who are exposed to digital technology.

Paperless banking is a revolution in the banking sector of Nepal, said Chiranjibi Nepal.

ANSWER: Banking ombudsman scheme

Explanation:
The Reserve Bank of India (RBI) has allowed consumers to lodge complaints against banks for non-adherence to norms related to electronic banking services, including those provided on mobile phones, under the banking ombudsman scheme, its cost-free dispute resolution mechanism.

The central bank has also allowed customers to file complaints against banks for deficiencies arising out of sale of third party products such as insurance policies and mutual fund schemes sold by banks.

The scope of the scheme, introduced in 1995, has been expanded.
The banking ombudsman has now been powered to pass an award of INR 20 lakh, as against the earlier threshold of INR 10 lakh.

The ombudsman can also give a consumer up to INR 1 lakh as compensation for loss of time, expenses incurred and mental anguish suffered during fighting the case.

According to the annual report on the banking ombudsman scheme for 2015-16 (July-June), 15 offices of banking ombudsman received 102,894 cases, a jump of 21% over the 2016-17 fiscal year.

Currently, there are 20 offices of banking ombudsman, according to the information available on central bank’s website.